Grads & parents misinformed about health insurance

MedSave Admin | May 24, 2008

College graduates and their parents may be under-educated about health insurance issues due partly to misinformation in mainstream media publications. A recent article in Beaver County Times Online, for example, included these points:



"...as soon as they walk across that stage (at graduation), they're no longer eligible to be included on their parents' policy." Actually, the parents' employer-provided group health insurance is a month-to-month contract that almost always renews on the 1st day of the month. Students listed on the coverage as of the beginning of the month are covered at least to the end of the month that they graduate.


Almost all of these group policies have conditional provisions to extend dependent coverage past  the date of college graduation. For example, if the student continues to graduate school or is financially/medically dependent on the parents due to a disability then most PA group insurance plans include an option to remain on the parents' plan. Because the notification of ineligibility and removal verification process is usually handled by regular postal mail, it takes some time, - usually a month or two - to remove the non-dependent adult children from a group health insurance plan.



The newspaper article indicates that there is a risk in the gap in coverage between the graduate's former coverage and the start of a new replacement insurance. One graduate is quoted saying "I just hope I don't get sick between now and when the coverage starts." In reality, most grads are eligible for replacement coverage that starts immediately (at midnight following a fast online enrollment) and so the risk of a gap in coverage is negligible.



The article correctly points out that "There are flexible short-term policies that come in around $100 a month" but does not address the issue that health insurance spending has sharply declined among young adults over the past two years. MedSave.com data indicates that the average cost of coverage issues to a 18-24 year old in western Pennsylvania has actually declined to about $86 per month. Our data combines the prices paid for both major medical insurance including the short term plans ranging from one month to 36 months that are traditionally used by graduates with the rates paid for permanently renewable mini-med and supplemental health insurance policies. We are concerned that graduates are buying the wrong type of health insurance, and wish that reporters would focus on that issue.  Over the past year young insurance buyers show a tendency to purchase very inexpensive limited benefit plans with appealing up-front benefits like no deductible or co-payment that provide little protection from catastrophic losses. Additionally, these ultra-low cost plans do not include a Certificate of Creditable Coverage that may be important when the graduate eventually lands their first job with health benefits. Parents and media reporting on this issue should stress the importance of using a major medical insurance policy - one that includes the term "short term medical" or "STM" in its name - to provide adequate coverage.



The article cites the 2006 census data indicating that young adults are more likely to lack health insurance than any other age group despite the fact that insurance is inexpensive and widely available at this age. Few reporters look at the underlying cause of this disturbing trend. MedSave.com has published a number of reports on the underlying cause of high rates of uninsured young adults and offers some constructive suggestions on reversing the dangerous trend. See  "Covering the Uninsured - 2008 Update", "MedSave.com Expands Support for Graduating Students", "Thanksgiving Health Insurance Tradition for College Students", "Health Insurance Options for Graduating Students", "Student Health Insurance Tips", "Ten Ways to Get More From Short Term Medical Insurance", "A Closer Look at America's Uninsured", and "Be Part of the Health Care Solution".



Tags : health insurance, student insurance, blogroll, graduate

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